European aluminium premiums rise sharply after hitting lows in September

The duty unpaid premium, as per a leading industry watcher, in Rotterdam was quoted at $115 per metric ton on December 8. Aluminium premiums in Europe rose sharply after hitting their historic low of $65 per ton in September. US (SPY) Midwest aluminium premiums are also holding steady after Alcoa announced capacity curtailments last month.

LME contracts

The LME (London Metals Exchange) also started aluminium premiums contracts to enable market participants to hedge the all-in aluminium prices. Aluminium premiums have been less volatile compared to aluminium prices. It would be interesting to see what impact the new LME contracts have on aluminium premiums.

Having said that, another rise in aluminium premiums doesn’t look likely, said experts. Aluminium markets still face oversupply, although the official LME aluminium inventories suggest otherwise. The steep rise in Chinese aluminium exports would also put pressure on regional aluminium premiums. The overall negative sentiments in the commodity space would also act as a deterrent for aluminium premiums rising more.

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